During the pandemic, digital mortgage closings became a critical tool to keep homebuyers and mortgage professionals safe and the market active.
But not everyone in the homebuying world has access to this technology.
Digital closings — also known as remote online notarization (RON) or eClosing — aren’t authorized in every U.S. state. Just 38 states allow eClosings and 48 states and Washington D.C. allow it through law or emergency action due to COVID-19.
The Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act of 2020 seeks to bring RON to every state, making interstate mortgage closings easier for homebuyers and mortgage lenders.
If passed, the SECURE Notarization Act would minimum standards for electronically notarizing records across state lines.
Under the bill, documents can be remotely notarized if:
- The individual and the notary are able to electronically communicate by sight and sound (by video chat)
- The notary verifies the individuals identity and records the notarization
- The notarization complies with other requirements, such as attaching a stamp or seal to the electronic record
The bill would also allow homebuyers to close a loan while overseas, although there are additional requirements.
Lastly, it requires U.S. courts and states to recognize remote online notarizations that follow both federal and state laws. This would essentially set a federal baseline for digital mortgage closings, and allow the states to add requirements as they see fit.
The SECURE Notarization Act was introduced into the Senate on March 18, 2020 by Sen. Kevin Cramer (R-ND) and has five cosponsors — two Democrats and three Republicans.
Like all legislation, it is subject to change as it is debated and voted on.
Remote online notarization would make the buying or refinancing a home safer and easier for consumers and lenders.
eClosings rose to prevalence during the pandemic as people migrated away from cities but were unable to meet with lenders and notaries in-person due to COVID restrictions.
“The use of this technology saw sharp demand particularly during the pandemic with the need to keep consumers safe as well as for business continuity,” said Teri Pansing, VP of Corporate Closing at Fairway Independent Mortgage Corporation, which owns Home.com.
Digital closings were and are especially important for homebuyers overseas, including military personnel, facing travel restrictions and shutdowns in other countries.
“It’s also a lifeline for consumers that were traveling abroad and did not have the ability to return to the states or schedule in-person meetings at embassies or consulates worldwide for signing services due to international closures of all government offices,” Pansing added. “We have been able to successfully facilitate signings in more than 30 countries to date.”
In addition to safety concerns, COVID brought on an increase in remote work and migration from the expensive coasts to more affordable inland areas. Remote eClosings remove the time, money, and hassle of travelling to sign papers, or shipping signed documents hundreds or even thousands of miles, that could have been signed online.
Pansing said Fairway has been facilitating RON signings for nearly three years in states that have adopted the legislation — even before the pandemic increased its prevalence.
Working for a lender that operates in all 50 states, she supports initiatives that would adopt uniform standards for fully electronic and fully remote transactions in all states.
The Mortgage Bankers Association (MBA), American Land Title Association (ALTA), and Mortgage Industry Standards Maintenance Organization (MISMO) have also expressed support for the SECURE Notarization Act.
“We feel strongly that Fairway has the ability to leverage relationships with industry leaders to help influence change in how the industry can safely and effectively facilitate real estate transactions in all markets we serve,” Pansing said.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.